24/7 Wall St. » CDWC

Pre-Market Stock News (May 30, 2007)

247wallst — Wed, 30 May 2007 07:09:23 +0000

(AAPL) Apple trading up 0.5% after Morgan Stanley raised its $110 target to $150.
(BGP) Borders Group posted a -$0.51 EPS loss vs. -$0.38e.
(BIIB) Biogen Idec announced up to $3 Billion in share repurchases.
(CDWC) CDW agrees to be acquired by Madison Dearborn Partners for $87.75 in cash.
(CWTR) Coldwater Creek trading up more than 10% after beating earnings expectations.
(DBRN) Dress Barn said May comparable s-s-s rose 10%.
(DNDN) Dendreon hit with a class action lawsuit.
(ESEA) Euroseas traded up close to 10% after the Greek shipping company doubled earnings.
(ESPD) eSpeed is being combined by Cantor Fitzgerald with Cantor’s BGC unit in what is said to be a $1.3 Billion deal, although this is sort of a zero sum game to ESPD holders on the surface.
(HGSI) Human Genome Sciences announces that dosing has begun in BLISS-52, the second of two pivotal Phase 3 clinical trials of LymphoStat-B in patients with active lupus.
(ICE) IntercontinentalExchange and CBOE have confirmed an agreement regarding CBOE exercise rights as part of the planned merger between ICE and Chicago Board of trade and sign an agreement in principle.
(LYO) Lyondell announced a $500M note offering.
(MNST) Monster’s job search will now be available through the Comcast portal.
(MSFT) Microsoft has introduced a new touch screen PC called “Surface” that is essentially a coffee table.
(PAY) VeriFone fell 4% after missing expectations and after “raised guidance” looked shy.
(PHM) Pulte Homes announced a 16% workforce cut.
(SFD) Smithfield Foods fell 5% after earnings warning.
(WSM) William Sonoma $0.16 EPS vs $0.13e.

Jon C. Ogg
May 30, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

CDW Goes to Private Equity (CDWC)

247wallst — Wed, 30 May 2007 06:56:26 +0000

CDW Corp (CDWC) shares are trading up marginally after the company agreed to be acquired by Madison Dearborn Partners for roughly $7.3 Billion in cash. The buyout price amounts to $87.75 per share in cash. Shares are at $86.00 pre-market after closing at $83.11 last night. The reason the shares are under the buyout price is because there are probably very few who would legitimately expect this offer to get a much higher rival bid.

Yesterday we noted that investors looking for a buyout should probably not expect too high of a premium from yesterday morning $83.00 prices. The stock had experienced four rounds of significant gap-ups in recent months and were up more than 35%

The merger may look like a low premium compared to yesterday’s close, but when you consider the move seen yesterday and the last couple of months this looks like a very fair buyout price. If there is a higher bid out there, it doesn’t look like Wall Street is betting too hard on it.

Jon C. Ogg
May 30, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

How Much is CDW Worth in a Buyout? (CDWC)

247wallst — Tue, 29 May 2007 09:20:40 +0000

Shares of CDW Corp, the old “Computer Discount Warehouse,” have been up more than 10% before pulling back on reports that Madison Dearborn Partners is the leader in talks to acquire the company. The WSJ said talks are sensitive and may come apart, and if the WSJ is reporting it then that sensitivity may have been breached. Whether or not the sensitivity has been breached is one thing, but shares are now up more than 35% since mid-March.

Shares nearly traded up to $80.00 earlier in May, but sold off in recent weeks as a takeover did not surface. This will also mark the fourth major gap-up phase for the stock and it just doesn’t look like on a 5-year and historic basis that the company would fetch much higher than current prices as $80.00 and higher puts this one back at the 2000 to 2001 all-time highs.

As of last look the founder still holds close to a 15% stake, although he is no longer at the helm of the company. The company is an attractive company and there are few who would argue that. CDW has been expanding offers to more customized units and has been selling more peripherals. The balance sheet is in fine shape, although the current stock price puts it at what appears to be between 4 and 5 times book value. That may be fine for more longer-term investors, but at some point you have to consider how much companies are worth and how high smart buyers are willing to pay. The forward P/E ratio of 21 at today’s premium is not at nosebleed levels but doesn’t scream bargain either.

If this company gets a buyout offer it would seem hard to justify a significant premium to today’s fourth round of gap up stock prices. The good news is that there is probably a significantly higher floor for investors compared to just a few months ago.

Jon C. Ogg
May 29, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.